“A New York Stock Exchange proposal intended to restore confidence in Wall Street securities research has been formally posted for public comment, despite strong opposition from major news organizations,” writes Kate Kelly in today’s Wall Street Journal.

“The Big Board’s proposed policy, which would impose restrictions relating to analysts’ discussions with print journalists, was published Tuesday by the Securities and Exchange Commission in the Federal Register, where potential U.S. agency rules and regulations are proffered for review.”

“The filing was expected, but nevertheless is important because it kicks off a two-month public-comment period for Wall Street, media companies and the public to offer feedback on the proposed changes. The filing also is notable because it coincides with a submission by the National Association of Securities Dealers, which owns the Nasdaq Stock Market, that similarly calls for analysts to disclose conflicts of interest, but omits some punitive steps pertaining to media contacts.”

“The NYSE proposal, which was preliminarily filed with the SEC in October, mandates that analysts disclose to print journalists any ways in which the analysts’ stock holdings or other personal affiliations pose a potential conflict with the stock advice they give. That part of the proposal mirrors a rule passed last year requiring analysts to disclose conflicts during television and radio interviews.”

“But the NYSE’s new proposal goes a step further, stating that analysts whose conflicts weren’t disclosed by print journalists who interviewed them would be expected to eschew future interviews with those journalists, or face penalties by the Big Board.”

“Unlike the NYSE, the NASD isn’t pursuing penalties against analysts whose disclosures aren’t published, creating the unusual situation where the SEC is seeking comment on two contrasting proposals from two entities under its jurisdiction. The NASD included the notion of penalties in an early version of its proposal, but later withdrew it.”

“The notion of sanctioning analysts for media decisions beyond their control drew opposition from media companies including Dow Jones & Co., which publishes The Wall Street Journal, as well as officials at New York Times Co. and AOL Time Warner Inc., which publishes Fortune magazine. Media executives say that while they support the notion of fuller disclosure, they are against mandates from stock-market regulators.”

” ‘We continue to believe that this will result in a decrease in the flow of information to investors and hope the NYSE will change its interpretation,’ the Times said Tuesday. ‘The NASD has done so, recognizing that the rules can provide appropriate disclosure to investors without impinging on editorial freedom.’ “

http://online.wsj.com/article/0,,SB1041994716298174664,00.html